Will BHP Follow CAT?
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Tim Lambert
Will BHP Follow CAT?
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Caterpillar (NYSE: CAT), the world’s largest equipment maker, has rebounded strongly due to better growth numbers from around the world.

It would seem natural that would be happening soon with BHP Billiton (NYSE: BHP), the largest natural resources company on the planet.

But BHP Billiton is down for the last week, month, quarter, six months, and year of market action (chart below).  For 2014, BHP Billiton has fallen more than 10 percent.  It is trading very close to its year low.  This has been the story for many stocks in the industrial metals group.

There are many reasons for long term investors to remain bullish about the future for BHP Billiton.

It will benefit will global growth increases even more.  Caterpillar has already gained.  But BHP Billiton needs for more raw materials to be consumed.  That will be coming.  When it does, the stock price will rise.

BHP Billiton is also converting itself into a major oil and natural gas company.

It has spent about $20 billion in this endeavor.  These funds have been directed towards North American energy assets, especially in the Southwest of the United States.  BHP Billiton’s holdings in the United States and Canada will position well to benefit from the increased demand for energy in the future.

The dividend yield pays investors to wait for global growth to increase the need for more oil, coal, iron ore, natural gas, and other commodities from BHP Billiton.

At present, the dividend yield for BHP Billiton is 4.22 percent.  That is much higher than the dividend yield for Caterpillar.  It also has a history of growing its dividend.  That makes BHP Billiton appealing to income investors.  It also shows the strength of the business model of BHP Billiton.

For long term investors, the total return from BHP Billiton should be rewarding when growth returns!


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